In this 2012 photo provided by a former member of the church, Word of Faith Fellowship leader Jane Whaley, center, holds a baby with others during a church ceremony in Spindale, North Carolina. On Thursday, Kent Covington of Rutherfordton, a top minister in the Word of Faith Fellowship church, was indicted by a federal grand jury on a charge of conspiracy to commit wire fraud, in what prosecutors called an unemployment insurance benefits scheme.. Associated Press

In this 2012 photo provided by a former member of the church, Word of Faith Fellowship leader Jane Whaley, center, holds a baby with others during a church ceremony in Spindale, North Carolina. On Thursday, Kent Covington of Rutherfordton, a top minister in the Word of Faith Fellowship church, was indicted by a federal grand jury on a charge of conspiracy to commit wire fraud, in what prosecutors called an unemployment insurance benefits scheme.. Associated Press

Members of NC church known for 'blasting' out demons accused of bilking taxpayers

A prominent leader of a controversial Western North Carolina church is accused of devising a scheme that cheated taxpayers out of tens of thousands of dollars in unemployment benefits.

Kent Covington of Rutherfordton, a top minister in the Word of Faith Fellowship church, was indicted Thursday by a federal grand jury on a charge of conspiracy to commit wire fraud.

Over five years, according to the indictment, Covington and "co-conspirators" filed more than $250,000 in phony unemployment claims for employees who kept working for companies owned by Word of Faith members.

Starting in 2008, the indictment said, Covington masterminded a scheme to help his plastics manufacturing company survive the recession by laying off his work force, applying for unemployment benefits for his employees, then forcing them to keep working.

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For the next five years, taxpayers and not Covington paid the employees' salaries, according top the indictment.

The indictment also accuses Covington of using his influence as a Word of Faith leader to force the other church members who worked for his Diverse Corporate Technologies Inc., to participate in the conspiracy.

Diane McKinny, a Covington employee and fellow Word of Faith member, also was named in the indictment and accused of filing fraudulent paperwork to support the unemployment claims.

According to the indictment, Covington and McKinny obtained more than six months of free labor for Covington's company, paid for by the government instead of the business.

The 63-year-old Covington also is accused of passing on the blueprint of his scheme to other church members who owned companies struggling through the recession.

Two church members who implemented the scheme were the father-and-son podiatry team of Jason and Jerry Gross, who began laying off employees at Foot & Ankle Center of the Carolinas in 2009, prosecutors said.

In the Kent Covington case, prosecutors with the U.S. Attorney's Office said they are seeking almost $310,000 in forfeitures from the defendants, according to Thursday's indictment.

Kent Covington and the 65-year-old McKinny are scheduled to appear in court on June 18.

"We take these accusations very seriously and are conducting our own investigation," Stephen Cash, an Asheville lawyer for the church, said in a statement to the Observer on Thursday night. "We intend to respond to the indictment in the near future." .